Child Care

Child Care

Industry Outlook

The child day-care industry generated $57 billion in 2019, according to IBISWorld. Economic recovery had benefited the industry as employment and disposable income levels increased. Industry revenues are estimated to have grown by an annual average of 4.0 percent from 2014–2019 but to have sped up to 2.9 percent in the last year of that period.

The Bureau of Labor Statistics notes growing recognition that early childhood education is important for children's cognitive and emotional development and confers lifelong benefits. However, child-care workers are expected to have approximately 2 percent employment growth through 2028, which is slower than the average for all other occupations. The high cost of daycare, coupled with an uptick in stay-at-home parents, were named as factors in the BLS’ forecast. Opportunities will result from the need to replace workers who leave the industry. Opportunities for care providers and teachers in this industry will be for those with more education. The larger centers in this industry will provide opportunities for several other occupations with good potential for growth, including general and operations managers, cooks and food preparation workers, and bus drivers.

Head Start has been renewed continually since its inception, partly because it has a high level of parental involvement and therefore a built-in constituency. However, unlike Social Security or Medicare, Head Start has not become a permanent entitlement, and this may reflect public ambivalence about the value of the program. Head Start's reputation was not enhanced by a 2012 study sponsored by the Department of Health and Human Services that tracked Head Start children through third grade and found few lasting benefits in terms of cognitive skills, social-emotional well-being, health, or parenting practices. The program responded by requiring local providers to compete for financing every five years and by imposing more consistent standards for performance.

The outlook for universal preschool is unclear. According to an August 2019 New York Times article, most of the candidates in a September 2019 Democratic debate "expressed support for a federal commitment to provide universal access to affordable preschool." Leading up to the 2020 presidential election, it appeared that early childhood education would remain a topic of discussion among political candidates, lawmakers, and American families.

The movement for universal preschool struggles not only with fiscal austerity but also with the traditional belief that children should be raised at home. Traditionalists and religious institutions have forged an alliance, partly on ideological grounds, but also because many churches house child-care facilities, and state funding of these programs would not permit the inclusion of religious instruction or worship. However, some states fund half-day programs and permit religious content at the same facility as long as it is limited to the other half of the day.

Other critics of universal preschool cite the recent research questioning the effectiveness of Head Start, but supporters of the initiative argue that Head Start's teachers are low-paid compared to public school teachers and that the program's standards have been inconsistent. The model intended for universal preschool is not Head Start but rather the high-quality preschool programs with better-paid staff.

The charter school movement is beginning to create some opportunities for employment in preschool education, so far mostly in big cities. The usual model is that an existing charter school at the elementary level adds a preschool program, although this practice is complicated by most states' different licensing requirements for schools and day-care centers. Some observers of these programs have criticized them for their emphasis on academic rigor, which is commendable in K-12 charter schools but may not be appropriate for the younger age group.

Child Care Aware of America's "2019 State Fact Sheets" report revealed that the federal government had recently provided 47 states with grant funding to help prepare the children of disadvantaged and low-income families for kindergarten. Totaling hundreds of millions of dollars, the funding was designated for early care and education programs. The organization noted that greater parental choice had been factored into the grants, so that parents could identify programs that worked best for their children.

Additionally, Child Care Aware of America reported that a February 2018 agreement between Congress and the Trump Administration would result in almost $4.8 billion in new funding for Child Care Development Block Grants (CCDBG) that improve the availability of child care services to low income families. However, the report explained that, when adjusted for inflation, federal child care funding remained below fiscal year 2001 levels, stating: "CCDBG requires robust, long-term investment in order to increase the number of children served, improve the quality and safety of programs and support the needs of the child care workforce." For the 2020 fiscal year, Child Care Aware of America estimated that an additional $5 billion funding increase was needed to cover CCDBG.

The generally low pay at day-care centers probably contributes to a high turnover rate, more than 50 percent per year, which helps create many job openings.

The 2020 coronavirus pandemic led to widespread social distancing, lockdowns, and social restrictions. Many children shifted to remote school even as their parents began to work from home. As a result, the children no longer needed child care or were prohibited from using it due to the disease risk. An estimated 350,000 child care professionals were out of a work as of the second half of 2020. Day-care centers struggled to adapt to the situation by integrating distanced teaching or learning into their work. Nearly half of child care providers in the U.S. completely shut down, and, of those open, around 85 percent were operating at less than half their normal capacity.

Revenue for the day care industry in the U.S. was expected to decline by more than 8 percent in 2020, according to the market researcher IBISWorld. Slow growth in the industry is projected through 2025, in line with the recovery of the jobs market and economy. Revenue growth is also expected throughout the next few years due to increases in corporate profit and disposable income. The marketer researcher notes, however, that "despite continued growth [through 2025], the industry is not expected to reach pre-COVID-19 pandemic revenue during the outlook period as consumer fears continue." Post pandemic, a potential bright spot for the U.S. child care industry could be the new administration's focus on child care as a national issue, with a $775 billion plan that includes making preschool universal and constructing new facilities for child care.